SEC Concept Release:
Streamlining and Consolidation of Executive and Director Compensation
The following information was submitted by 25 individuals.
Subject: Executive Compensation (Rel. Nos. 33-7184; 34-35894; File No. S7-14-95)
Comments: I am writing as a citizen concerned about disclosure of executive and board compensation in proxy statements.
Current disclosure requirements for compensation are inadequate and do not
provide shareholders with the information necessary to accurately assess these
I believe the following changes in executive and board compensation disclosure
would benefit shareholders and the public:
- Corporations should be required to disclose in their proxy statements the
relationship between executive compensation and employee compensation. This
would help investors better evaluate employee-management relations and their
impact on company performance. Disclosure should include the ratio of average
employees' compensation to top executives' compensation, growth in average
employee compensation compared to growth in executive compensation, and full
reporting of stock options and profit sharing plans for all employees.
- Currently the SEC allows companies to report the value of stock option
grants by one of two methods, creating confusion for shareholders who are left
without a consistent way of evaluating the value of these grants. The SEC should
require all companies to report the present value of stock option grants
according to a uniform method, such as the Black-Scholes method.
- The SEC should require that all benefits to members of a company's board of
directors be reported in tabular form, including: the director's name; the
amount of any annual retainer fees; the amount of any separate attendance fees;
the amount of any consulting fees, special assignment fees or other special
compensatory fees; the number of any shares of stock granted; and the number of
securities underlying any stock options/SARs granted.
- The proxy statement should include full disclosure of severance benefits and
deferred compensation for the five most highly paid executives.
Please incorporate these recommendations into any current or future proposed
rules which deal with executive and board compensation disclosure.